Is it nuts to design, permit and build an addition to your house by yourself?

Monday, June 20, 2011

solar in California

There was potentially big news for solar in California. The California Public Utilities Commission (CPUC) decided that PG&E and other utility companies have to pay homeowners for excess solar power. In the past, it's been simple net-metering, and any excess was used to offset their bill. Now PG&E has to pay a market rate for the excess. In theory that means solar panels can be paid off sooner, and eventually even make money.

Why isn't this huge news? Because the price was set based on daytime wholesale electricity rates paid to power plant owners, which fluctuate daily based on market conditions. That means when supply is low and demand is high, all is good for power producers. But much of the day and much of the year, California has an excess of electricity available, which means low prices, sometimes even negative.

Part of my day job is writing software for a small power plant, one piece of which is a program to monitor the energy price through the day. The price is set by the California ISO (CAISO), and is affected by supply and demand, loss, and transmission costs. After deregulation, companies like Enron gamed the market, resulting in power shortages, rolling blackouts and high prices. CAISO is designed to hopefully eliminate that possibility in the future, in part by always making sure there's more than enough power to meet the demand.

This year in particular, prices have been relatively low in part because demand has been low due to cooler than normal temperatures (until last week), and in part because of higher supply. Why not just dial back production if there's too much? Some generation is hydroelectric, and generates 24x7 depending on water flow, which has been higher this year. Even fossil-fuel based plants that can be adjusted up or down usually can't be adjusted that quickly, so there's generally a large excess.

The other factor is that solar is still a tiny portion of the power generated in California. Yesterday, for example, solar in California accounted for 4,142 MW hours of power, mostly between 8AM and 7PM. That's out of total system demand of 602,261 MW hours, or less than 0.7% of the total. A residential solar install is going to be a tiny fraction of that tiny fraction. All that means that with prices set based on market rates, the payment amounts are going to be very small.

As noted in the article, some people think this is fair, while others think the price paid should be higher to encourage further solar development. What's the right answer? I don't know, but in the short-term this doesn't change much, even for most solar owners. We still don't have solar power, but now that our neighbor's big tree is gone, it may make sense.

Of course, since posting this earlier, today has been the hottest of the year so far, and demand is way up. So naturally prices are, too :-)

re: more solar, the big limiter is still cost. There are various tax incentives and some financing options, but it still costs a lot of money to get a system installed. As the price per watt for panels continues to fall, that gets better.

re: fair, what's fair to homeowners and utilities? If PG&E can buy power from another source for less than they can from a homeowner with solar panels, which should they buy? I feel there should be something to weight things towards renewable, local and distributed power sources, but even with that cost is still the bottom line.

One thing I forgot to mention: the fluctuating price is a big reason why PG&E and other utilities want to install "smart meters". For most customers, PG&E charges the same rate day or night (unless you use enough to move into a higher tier.) But the supply and demand vary greatly during a 24 hour period, so the price does, too. PG&E would like to be able to charge more for electricity when it costs them more. That would encourage people to use power during the night when there's an excess supply, and discourage them from using it when demand is extremely high.

Hi Gene, Thanks for the information! Our solar power is used by us, but our neighbor produces a lot more than he needs, and he's been waiting for (something kind of like) this. I'll have to send him your link. Dana